Required information The following information applies to th

Required information [The following information applies to the questions displayed below. Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company\'s most recent year is given Office Total Company Minneapolis $525,000 100.0% $105,000 100% $420,000 100 Chicago Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income 283,500 54.0% 252,000 168,000 63,000 60% 30% 52% 18% 31,500 73,500 0 54,600 40 241,500 46.0% 117,60022:50 15% 123,900 23.6% $ 18,900 $105,000 25 84,000 16.0% $ 39,900 7.6% 2. By how much would the company\'s net operating income increase if Minneapolis increased its sales by $52,500 per year? Assume no change in cost behavior patterns Net operating income increase

Solution

2 Net operating income increase = 52500*40%= $21000